The dangers of profitable short-term holiday rentals

At this time of year, short term holiday rentals can be profitable, but tenants need to ensure that they stay in control

If you own a home anywhere along the South African coast or in the more attractive parts of the country, it is possible to make good money by renting it out at this time of year. This, in turn, means that you may be able to enjoy a longer and more expensive holiday yourself than you would normally be able to afford – or simply to be able to build up your own savings.

“There are, however, a number of dangers attached to renting out a private home”, says Bill Rawson, Chairman of the Rawson Property Group, and to avoid being hit by these, most home owners find it worth their while to employ a professional renting agent, even if this does mean that they will have to sacrifice 20% or 30% of the sum paid to them.

Whether you go it alone or use an agent, says Rawson, certain precautions should be taken and these are absolutely necessary.

1. Make certain that your home is insured and that the premiums are paid up to date. For some inexplicable reason the chances of severe damage occurring are always stronger when it is rented than when it is occupied by the owner. The owner therefore has to safeguard against this.

2. Insist on some form of comprehensive credit and/or management checks being carried out on the tenant before he or she is given occupation of the property.

3. Never rent a property on a short term lease without first taking payment up front — short term tenants should pay for their entire stay before moving in. In the vast majority of cases tenants will look after the property, but that being said there is still a tendency to charge too little for deposits just in case something goes wrong or something gets damaged

4. Make a photographic record of the condition of every room in the house when you hand it over and get the tenant to sign that this is accurate. Also get him to sign an inventory for all the equipment, cutlery, crockery, bed linen, etc. in the home.

5. Check that all security equipment is in working order and the tenant knows how to operate it.

6. If at all feasible, employ a domestic to come in daily to tidy up the house. Ensure that the tenants accept this arrangement and allow him or her access.

7. Ensure that the garden is well watered and in good condition on the day that you hand over the home and make the tenant promise to keep up the watering. If there is a swimming pool, ensure that it, too, is in pristine condition and the tenant knows how to work the equipment. (In most cases it probably pays to employ a maintenance contractor to look after the pool, but this can be expensive.)

8. If your tenant is a heavy smoker or has pets that leave smells, insist that he adds to the payment an amount for steam cleaning all carpets, curtains and furniture covers prior to you or the next tenant taking occupation. Many an owner will insist on this charge (it is not cheap), but even asking for it will reinforce the message that the home should be vacated without unpleasant smells being left behind there.

“Regrettably,” says Rawson, “there is the type of tenant who will feel that every rand he has spent on rent is a rand too much and who will be deliberately neglectful and sloppy while on holiday. The owner needs to take every step to protect his property from such tenants and to set up conditions to force the tenant to behave reasonably well. Fortunately the vast majority of tenants are trustworthy and as it can be very rewarding to rent a home short term on a high fee, it is definitely worthwhile taking the trouble to ensure that the tenant is ‘contained’ without making him feel that he is in a military boot camp.”